Labor Day seems an appropriate time for a story about capitalism.
Sounds like an awesome, profound subject for my weekly blog post, but I promise it is not deep. Or long.
It is a tale of working men and women prevailing, and about the brouhaha over the recent labor and management disputes at the Market Basket supermarket chain. Readers from other parts of the country may be unaware of the turmoil this New England-based company experienced over the past few months.
The supermarket chain, comprised of 71 stores in Massachusetts, New Hampshire and Maine, is an excellent example of how capitalism can work for everyone in a positive way when management and employees are on the same page. It is refreshing to hear about companies NOT cutting staff, employee hours, pay and benefits while upper management amasses millions.
The owners of Market Basket made oodles of money over the years. Yet employees respected management, knew management cared about them, and workers earned a respectable, if not awesome, income. CEO Arthur T. instituted a retirement plan, encouraged entry-level personnel to work their way up the corporate ladder, gave out holiday bonuses, and treated customers and suppliers respectfully and fairly.
But that was not enough for members of the company Board who wanted a larger piece of the cash pie. Of course corporate politics are not that simple, but that was the bottom line.
The saga began decades ago. It is a story similar to that of a lot of family-owned businesses. The founder and head of the family business dies, and the business passes to the next generation. The second generation often works together harmoniously.
When that generation passes or moves on to an upscale retirement mecca in Florida or Arizona, the third generation assumes the company reins. Frequently it is the third generation where trouble begins. In the case of the Demoulas family, owners of the Market Basket empire, trouble was already brewing, but remained low-key. When the third generation took over, schism surfaced and festered.
The animosity, legal disputes and business maneuvers between cousins Arthur S. and Arthur T. (Demoulas) came to a head when the company board (led by Arthur S. and his cronies) fired Arthur T. (the CEO) and a couple of other executives (Arthur T.’s cronies).
What the board did not anticipate was the overwhelming response by Market Basket employees.
Arthur T. is much beloved, and his dethronement was strongly opposed by the rank-and-file. So much so that they rebelled. Executives resigned and employees rallied in support of Arthur T. They refused to follow new management’s instructions or restock store shelves. Customers joined the dispute, taping receipts from Market Basket competitors to store windows. A social media campaign publicized and supported the protesters.
The company hemorrhaged money (losses estimated at $70 million a day). Workers ignored pleas by the new CEO and the board to return to work, perceiving new management (Arthur S.’s appointees) as too focused on delivering additional profits to the detriment of employees.
The governors of Massachusetts and New Hampshire stepped in and attempted to broker a deal. Arthur T. bid to buy Arthur S.’s 50.5% of the company.
On August 27th (2014) the Arthur S. camp caved and agreed to sell their portion of the company to Arthur T. for $1.5 billion.
Arthur T. once again is Market Basket CEO.
Arthur S. and his cronies can retire in splendor wherever they want.
Employees immediately began restocking shelves.
The stores have been basically inoperable for two months. Hopefully they can regain their position in the marketplace and continue to prosper.
It is an encouraging story of capitalism benefiting all parties (owners, workers, and consumers) winning a battle against a narrowly defined capitalism focused on a few elite owners.
And that is The End of my sermon-story.
For a number of (most likely) more interesting articles, check out this week’s Best of Boomer blogs!